Federal Reserve President Claims Cryptocurrencies Solve An ‘Important Social Problem’

St. Louis Federal Reserve President James Bullard told reporters on Friday that cryptocurrencies will cause a significant shift in the U.S. financial system. In fact, at its current pace, the cryptocurrency revolution may end up normalizing non-uniform currency relations.

Within the modern nation-state system, it’s always been tradition that governments issue their own currencies. These sovereign currencies were backed by state power and issued by the country’s central bank. In almost every country in the world, competing currencies are banned in spaces other than foreign exchange markets. However, cryptocurrencies are forcing us to reconsider how we understand currency says St. Louis Federal Reserve President James Bullard.

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An Economy with Non-Uniform Currencies

“The current situation could be described as a drift toward a non-uniform currency in the US,” Bullard said in his delivery at an academic conference held on Friday. Although seemingly inevitable, he argues that most consumers and businesses will not like this change. It would create an environment where “many types of currency trade simultaneously at a variety of prices in a local market.” Whereas previously these transactions would be considered “illegal or quasi-illegal,” they have now been forced into the spotlight as regulators scramble to devise a proper solution.

The President was largely critical of cryptocurrencies during this speech. However, he admitted they are tackling an “important social problem” despite “pushing us in the wrong direction.”

Bullard seems to suggest that the abundance of competing currencies would create ‘confusion’ among businesses and consumers. However, this claim is unrealistic in today’s digital economy. Conversions between different currencies are almost instant nowadays, which means that the burden won’t be on businesses to convert funds.

Regulators Need to Catch Up

Bullard seems to understand the profound implications of cryptocurrencies but arguably fails to grasp the technological leaps that come with them. He imagines these currencies competing given today’s conditions. However, Bullard should imagine a world where stablecoins, various cryptocurrencies, and actual sovereign currencies are interchangeable. This kind of future is not only possible, but is actively being worked on by many exchanges, custodial services, and cryptocurrency projects.

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As a trusted news outlet in the blockchain and cryptocurrency industry, BeInCrypto
always strives for the highest journalistic standards and adheres to a strict set
of editorial policies. BeInCrypto is an independent website with authors and management
that may personally invest in cryptocurrencies or blockchain startups.

Raised in the U.S, Lucian graduated with a BA in economic history. An accomplished freelance journalist, he specializes in writing about the cryptocurrency space and the digital '4th industrial revolution' we find ourselves in. Email.

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As a trusted news outlet in the blockchain and cryptocurrency industry, BeInCrypto
always strives for the highest journalistic standards and adheres to a strict set
of editorial policies. BeInCrypto is an independent website with authors and management
that may personally invest in cryptocurrencies or blockchain startups.